Owning properties through a mortgage in Nigeria is increasingly challenging due to high inflation, limited financing options, and rising interest rates. However, understanding how to own properties through mortgage in Nigeria can help you navigate these obstacles and achieve your homeownership dreams.
According to the Central Bank of Nigeria, homeownership in the country is around 10%, significantly lower than in the United States and the United Kingdom. This disparity is largely due to the high costs of construction, land, and financing, making it difficult for middle- and low-income earners to purchase homes outright.
What is a Mortgage?
A mortgage is a financial arrangement where a lender (usually a mortgage bank) provides a loan to purchase property. The property serves as collateral, meaning ownership remains with the lender until the loan is fully repaid.
Steps to Secure a Mortgage in Nigeria
- Save for a Deposit: Before applying for a mortgage, you’ll need to save a deposit. This is typically a percentage of the property’s value, required by both the seller and the lending institution.
- Explore Housing Schemes: Look into programs like the National Housing Fund (NHF), designed to provide affordable financing to contributors.
- Assess Repayment Ability: Mortgages are long-term commitments, so ensure you can manage the monthly repayments. Subtract your expenses from your income to determine how much you can afford.
- Choose the Right Property: Not all properties are eligible for mortgage financing, so it’s important to select one that is.
- Apply for a Mortgage Loan: Once you have your deposit and have chosen a suitable property, approach a mortgage bank to start the loan application process.
Accredited Mortgage Banks in Nigeria
The Central Bank of Nigeria has accredited several mortgage banks that can disburse NHF loans and provide advisory services. Some of these include:
- Abbey Building Society
- Aso Savings & Loans
- Brent Mortgage Bank
- FBN Mortgages
- Lagos Building and Investment Company
- Mutual Alliance Savings and Loans
- Nigerian Police Mortgage Bank
How to Own a Home through the Federal Mortgage Bank
The Federal Mortgage Bank of Nigeria (FMBN) offers various options for homeownership, including a rent-to-own scheme with non-interest housing solutions. This option allows Nigerians to own homes without the burden of interest, making it more accessible to many.
To apply, visit any FMBN branch and complete a free application. You must be a contributor to the National Housing Fund, and properties are available immediately once your finances have been assessed and approved.
The National Housing Fund (NHF) Scheme
The National Housing Fund was established in 1992 to mobilize funds from various sources, including commercial banks, insurance companies, Nigerian workers, and the federal government, to provide affordable housing loans to contributors. To benefit from this scheme, you need to contribute 2.5% of your basic salary/income to the fund.
Eligibility Criteria for NHF Loans
- Nigerian citizenship and over 18 years old
- A minimum of six months’ contribution to the NHF
- Proof of regular income to ensure loan repayment
Conclusion
Owning a home in Nigeria may seem daunting, but with the right approach to mortgages and participation in the National Housing Fund, it’s possible to secure a property with favorable terms. By contributing to the NHF, you can access mortgage loans with low-interest rates and flexible repayment options, making homeownership achievable for many Nigerians.
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